Ex-Financial Times Journalist Tom Foremski @ the Collision of Technology and Media

14

June

2012

|

11:11 AM

America/Los_Angeles

Competing With One Arm Tied - Silicon Valley's Gender Gap Handicap

(Sol Tzvi, founder of Genieo, based in Israel.)

Silicon Valley is running hard to maintain its position as the global innovation engine, against competition with dozens of fast growing innovation centers around the world.

Which is why it's puzzling that Silicon Valley has such a large gender gap in key sectors such as angels, VCs, entrepreneurs, engineers, and in senior executive roles.

Why isn't Silicon Valley using all of its people?

Successful startups are businesses that quickly figure out how to make products and services far more productive, for far less money, they spot arbitrage opportunities in huge industries and markets, they make use of the best resources available to them -- tools, capital, business know-how, skilled staff. So why so few women?

The recent Kleiner Perkins Caufield & Byers sex discrimination suit has focused attention on the shockingly small number of women in the VC community. That's also true for many other sectors in Silicon Valley.

Some of the larger companies such as Intel, Hewlett-Packard, Google, Yahoo!, have had programs for many years that focus on hiring more women. And they are active supporters of organizations such as the Anita Borg Institute, named after one of the top US women computer researchers.

Ms Borg, who died in 2003, was a tireless campaigner for increasing the number of women in tech professions. In her acceptance speech at the 2002 Heinz Foundation Awards, she said:

Adriana Gascoigne and her colleagues at Girls in Tech are also working hard to build up the number of women in Silicon Valley and other innovation centers.

And while the involvement of large companies in supporting the Anita Borg Institute, and other women's organizations is commendable, a long-established culture of male dominance is difficult to change within large, older organizations, even fairly recent corporate cultures such as Google's, are from another time. It's best to get it right at the start, which is why gender inequality within startups is something that deserves close monitoring and comment.

Not just unfair...

The small number of women in important roles in Silicon Valley is not just an issue of fairness and justice. It's also an issue of extremely poor management of resources.

Startups constantly say that they focus on their people first. VCs say they invest in people first, and that the makeup of the founding team is their most important consideration. So why are these teams so lopsided, so mono-gender? Mono-anything is rarely good.

If we agree that diversity in startup teams is important, because businesses need teams that have to figure out how to build and survive within a much larger culture -- a culture that's formed by hundreds of millions of people, as in the case of Internet businesses -- then the lack of women insiders, able to impart their insights, abilities, and their energies, is a serious mistake. Such mono-gender, low diversity startups, are born flawed.

Teams of innovators that show a greater mix of backgrounds, genders, and ethnicities will surely have a far better chance of success than those that don't. If I were a VC I would be paying extra attention to diversity because I want to reduce my risks, I want my investments to be successful

Yet that's not happening. Most of the startups I meet with are all founded by men, and women are rare co-founders.

This shows that Silicon Valley isn't making the best use of its resources, and it is the most valuable resource of all: people.

It's as if our startups are trying to compete with one arm tied behind their back, and their investors are actively supporting this handicap. Why this is the case I don't know and it doesn't matter. The future will be different than the present and the teams that adapt the quickest will be the winners.

The situation has to change, and it will change, simply because it makes no rational or economic sense. Once VCs realize the importance of diversity in improving the chance of startup success, things will change quickly.

Lots of capable female business leaders

I get to meet many impressive women founders, such as Heddi Cundle (below) at myTab.co, the travel services site, which I advise from time to time, but there's not enough of them.

I've met very impressive founders of startups based abroad, such as Sol Tzvi, (top of article ) founder of Genieo; and in the UK, Wendy Tan White, who's startup Moonfruit was recently acquired by Yell Group for $28 million.

Maybe other countries are jumping ahead of us. Maybe it's Silicon Valley that's living in the past instead of inventing the future.

There are scores of women that can help build successful businesses but they aren't getting the chance -- and scores of startups that are the poorer for it.

Silicon Valley should use its global leadership position to show how to build the most diverse, and the most successful entrepreneurial teams. You can be sure that the rest of the world will follow, and quickly.

Social and civil change could propagate across the globe at viral speeds. This is not rhetoric, we've seen the changes in the Middle East and how quickly they can spread, even within highly conservative, traditional cultures.

Gender inequality is something that Silicon Valley can do something about -- and make money, because its startups will become more successful.

If Silicon Valley won't do it, then the rest of the world will move on -- and do it first. First mover is a powerful position to be in.